14 Over this price range the As a result of this price range the the - demand is: TR will: %Change in P %Change in Q4 (Elastic, inelastic, unit elastic) (increase, decrease, not change) 1. +3% -2% +3% -3% 3. +3% -5% 4- -6% 4% 5- -6% +10% 6. -6% +6% 7. If the price increases by 5% and Ed= 1.5, then what happened to the quantity? And what happened to the total revenue? 8. If the quantity decreases by $10 and the Ed=.8, then what happened to the price? And what happened to the total revenue? 9. Assume the price of celery decreased from $14 to $11 and the quantity increased from 260 to 300. a. Calculate the original TR: Calculate the new TR: b. Total revenue (increased, decreased, no change), so celery is (elastic, inelastic, unit elastic). c. Calculate the Ed= 10. True or False: "If a firm is producing at a point on the inelastic portion of its demand curve, a price increase will always result in an increase in revenue and profit." Graph the following demand curve, do the calculations and label the range that is elastic, inelastic and unit elastic. P Calculate the E. and the change in TR (+, -, no change) for each price range: $10 $9 to $8 9 2 Ed= _TR: 8 $8 to $7 Ed= TR: 6 5 $6 to $5 E= TR: 8 $3 to $2 Ed= TR: 10 Demand 11. Place a $0.15 cent per unit excise tax on demand curves D, and D2 (add a new supply curve). After the tax, calculate: Eq: PB: PS: Fg: 2-6.3: Eq: PB: Total consumer expenditure: Total consumer expenditure: Total producer revenue Net producer price recieved: Total tax revenue: Total Producer Tax Incidence: Producer tax incidence per unit: $0.50 $0.50 $0.45 $0.45 $0.40 $0.40 $0.35 GREE $0.35 $ $0.30 $ $0.30 # $0.25 if $0.25 @ $0.20 Q. $0.20 D2 PRICE P $0.15 8 $0.15 $0.10 # $0.10 $0.05 $0.05 0 50 100 150 200 250 300 QUANTITY PER WEEK QUANTITY PER WEEK Scanned with CamScanner